I consider a uniform-price auction under complete information. The possibility of resale attracts speculators who have no use value for the objects on sale. A high-value bidder may strictly prefer to let a speculator win some of the objects and then buy in the resale market, in order to keep the auction price low. Although resale induces entry by speculators and therefore increases the number of competitors, high-value bidders’ incentives to “reduce demand” are also affected. Allowing resale to attract speculators reduces the seller’s revenue when bidders’ valuations are dispersed. Speculators increase the seller’s revenue only when they are outbid.

Are Speculators Unwelcome in Auctions? / Pagnozzi, Marco. - In: AMERICAN ECONOMIC JOURNAL: MICROECONOMICS. - ISSN 1945-7669. - STAMPA. - 2:2(2010), pp. 97-131.

Are Speculators Unwelcome in Auctions?

PAGNOZZI, MARCO
2010

Abstract

I consider a uniform-price auction under complete information. The possibility of resale attracts speculators who have no use value for the objects on sale. A high-value bidder may strictly prefer to let a speculator win some of the objects and then buy in the resale market, in order to keep the auction price low. Although resale induces entry by speculators and therefore increases the number of competitors, high-value bidders’ incentives to “reduce demand” are also affected. Allowing resale to attract speculators reduces the seller’s revenue when bidders’ valuations are dispersed. Speculators increase the seller’s revenue only when they are outbid.
2010
Are Speculators Unwelcome in Auctions? / Pagnozzi, Marco. - In: AMERICAN ECONOMIC JOURNAL: MICROECONOMICS. - ISSN 1945-7669. - STAMPA. - 2:2(2010), pp. 97-131.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11588/353046
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